Friday, September 06, 2013

Hey, another trademark overclaiming case involving Fleurty
Girl (WHO
DAT?).Also another case proving
that DMCA notices are not risk-free for their senders, even in the absence of a
§512(f) claim.

“Bead dogs” historically have been made by twisting broken
strands of plastic Mardi Gras beads into the shape of a dog. The practice began as street art but has now been
converted to merchandise.Nola Spice
(run by third party counterdefendant Duarte) began selling bead dog jewelry in
spring 2012.

Haydel also sells bead dog merchandise.It commissioned an artist in April 2008 to
create a Mardi Gras Bead Dog to serve as its mascot:

The result was a design of
spherical shapes that all intersected and collided so as to resemble a dog made
of Mardi Gras beads. There is also a necklace around the dog’s neck and smaller
spheres to represent the dog’s eyes and nose. The mascot generally has a
specific color scheme: purple body, yellow necklace, and green eyes and nose.

Haydel had two registered marks for the phrase MARDI GRAS
BEAD DOG and for the bead dog design for jewelry, clothing, and king cake pastries.
Haydel also registered a copyright in the bead dog for “photograph(s), jewelry
design, 2–D artwork, [and] sculpture.” (It’s not clear to me what this means; a copyright registration must be for a specific work/s, but maybe they have a registration of a photo of the jewelry?)Haydel allegedly used
the bead dog in marketing, including raffles for multiple bead dog
statues.As part of a Louisiana Society
for the Prevention of Cruelty to Animals fundraiser, Hayden allowed several
bead dog statues to be cast from its mold and decorated by different artists,
now on display around New Orleans. Also, Haydel entered into a licensing
agreement with the perhaps now gunshy Fleurty Girl to sell bead dog earrings
and necklaces—sterling silver, apparently cast in a mold, and not made of
beads.

Fleurty Girl also sells a poster
of Haydel’s bead dog statues, and Haydel, through Fleurty Girl, entered into an
agreement with a local author to create a children’s book about the bead dog.

Haydel alleged that in summer 2012, customers began to ask
about buying Nola Spice’s bead dog jewelry from Haydel. Upon investigation, it
found that Duarte had posted a photo on her Facebook page of her posing with
Haydel’s statue.Haydel alleged that she
posted photos of her bead dog jewelry near this photo, in an attempt to create
confusion.Haydel sent C&D letters;
she promptly removed the images of herself in front of Haydel’s statues as well
as images of Haydel’s poster.Haydel
also sent DMCA takedown notices to several websites, leading to the removal of
Nola Spice’s merchandise from Etsy.com, Twitter.com, Storenvy.com, and
Facebook.com.Though Nola Spice was, at
the time of the court’s hearing, able to post some of its bead dog merchandise,
Duarte feared full-scale operations because too many takedown notices could get
her permanently banned.

(Review question: any other potential issues with any of these?)

Nola Spice sued for a declaratory judgment of
noninfringement and cancellation of Haydel’s marks, and Haydel counterclaimed
for copyright infringement, trademark infringement, and trademark dilution (seriously?).

Haydel argued that its marks weren’t generic because the
public associated Mardi Gras Bead Dog jewelry, clothing, and baked goods with
Haydel, as evidenced by numerous online stories featuring Haydel’s Mardi Gras
Bead Dog, which also showed secondary meaning. (It also claimed to have spent over $600,000
on advertising.)Haydel also argued that
its marks weren’t descriptive, because the term MARDI GRAS BEAD DOG and the bead
dog design didn’t describe jewelry, clothing, or baked goods. Thus, Haydel argued that the marks were
arbitrary, or maybe suggestive for jewelry.

Because Haydel had registrations, they were presumed
valid.The court said that this
presumption could be rebutted by proof that the mark wasn’t inherently
distinctive (or, in fact, proof that the mark wasn’t distinctive at all, but
conflating registration with inherent distinctiveness is a weirdly common error
and I haven’t figured out why).Nola
Spice had the burden of proof.

Fortunately for Nola Spice, it met that burden.First, the word mark was either generic or
descriptive without secondary meaning, and therefore is not protectible. The
mark was generic because there’s a product—a bead dog—and the term “Mardi Gras
bead dog” described the entire class of products, rather than individualized
characteristics of Haydel’s products.Haydel argued that a registered mark couldn’t be found generic solely
because it was also used to identify a unique product or service—the
Anti-Monopoly rule—but the statute goes on to say that “[t]he primary
significance of the registered mark to the relevant public rather than
purchaser motivation shall be the test for determining whether the registered
mark has become the generic name of goods or services on or in connection with
which it has been used.” The relevant
inquiry is whether, when purchasers ask for an item, they mean any brand of
that product and not specifically the trademark claimant’s product.The evidence in the record suggested that
this was true of bead dogs (at least for jewelry, though the court isn’t that
specific).

Haydel itself identified an online exchange between Duarte and
Georgia Wilson, the owner of a local business known as “The Bead Shop,” that showing
that customers looking for “bead dogs” are not looking only for Haydel’s bead
dogs. Wilson’s customer inquired about
buying a bead dog, and Wilson directed her to Fleurty Girl. When the customer
said she didn’t want to spend that much (presently $40) on the necklace, Wilson
sent her to Duarte, who sold her a bead dog product. If the bead dog were only associated with
Haydel, Wilson and her customer would only have thought of Haydel.(The 9th Circuit’s formulation,
which asks whether the term at issue answers the question “What am I?”
(generic) or “Who am I?” (trademark), might be easier to apply.“A Mardi Gras bead dog” seems pretty clearly
to be an answer to the former question.)

In the alternative, the mark was descriptive and lacking in
secondary meaning.Four years of
registration was insufficient, and Nola Spice showed that sales of Haydel’s
Mardi Gras Bead Dog jewelry were minimal—about $30,000 in sales over four
years.Haydel didn’t provide survey or
direct consumer evidence, just evidence of media coverage and ad expenses.But that didn’t prove the effect of the advertising or media
coverage.At oral argument Haydel’s
counsel nearly conceded lack of secondary meaning, stating that secondary
meaning was not the relevant inquiry and that “you can’t start anything if you
get cut out—if your knees get cut out from underneath you.”But the doctrine of “secondary meaning in the
making” has been rejected, and Haydel’s investment of time and money developing
its mascot doesn’t qualify it for trademark protection as it ramps up its
operation.

The court then turned to the design mark, which is judged by
the Seabrook test rather than the Abercrombie test for words, since the
latter “fails to illuminate the fundamental inquiry” of whether the mark’s
“intrinsic nature serves to identify” its owner. Seabrook
asks whether a design is a common basic shape or design, whether it was
unique or unusual in a particular field, whether it’s a mere refinement of a
common and well-known form of ornamentation for a particular class of goods,
and whether it’s capable of creating a commercial impression distinct from
accompanying words.(I think aesthetic
functionality might’ve been a better rationale, but then I think Seabrook is often unhelpful.)The real question is whether the design “is
so unique, unusual or unexpected in this market that one can assume without
proof that it will automatically be perceived by customers as an indicator of
origin—a trademark.” (Except that of
course for product design, as opposed to product packaging, there is no such
thing as inherent distinctiveness, after Wal-Mart,
so this has to be the wrong standard, at least as applied to the design
incorporated into jewelry.)

Haydel didn’t show that the bead dog design was “unique,
unusual or unexpected.” (Note that this appears to misstate the burden, given
the registration, but I don’t think it’s reversible error, given the context
and what the court ultimately says.)It
argued that people associate it with the bead dog because there’s one in front
of Haydel’s store and it engaged in the SPCA fundraiser, but there was no
evidence of actual association.Plus,
they sold less than 200 pieces of BEAD DOG DESIGN jewelry over four years,
which negated their claims that the designs were “wildly popular and integrated
into the culture of New Orleans.”

The court noted that “common sense” supported the conclusion
that “the design and idea of the bead dog is so commonplace that children in
the street have replicated it for over sixty years during Mardi Gras parades,
and that it is Haydel that based their design off of the original Mardi Gras
bead dog trinkets.”Indeed, counsel said
at oral argument that when Haydel set out to choose a mascot, it looked for
“something that is generically oriented to the City of New Orleans but not
attached to your baking goods or jewelry.” Given this extensive background, the court
found it unlikely that consumers would view the design and automatically
associate it with Haydel in particular.At most, consumers might associate the design with the statues found
around the area as part of the “Paws on Parade” fundraiser, but there was no
showing that consumers associated those statues with Haydel. The statues had
plaques nearby with Haydel’s name on them, but “most people would not have been
able to see the plaques, as the statues are most often viewed from a distance,
while driving and the plaques are rather small.”

Viewing the facts in a light most favorable to Haydel, the
evidence overwhelmingly supported Nola Spice’s position that Haydel’s marks
were either generic or descriptive without secondary meaning. Nola Spice
received its declaratory judgment of noninfringement, as well as an order
cancelling Haydel’s marks.

Nola Spice also argued that Haydel violated the state unfair
competition law (LUTPA) because it was unfairly trying to suppress Nola Spice’s
business by (1) claiming a monopoly over a longstanding tradition it didn’t
create; (2) making misrepresentations to the Copyright Office; (3) making
misrepresentations in takedown notices to Facebook; and (4) claiming rights
without justification in the manner of a trademark bully.The court declined to find a violation of
LUTPA; Haydel’s actions weren’t “unethical, oppressive, unscrupulous, or
substantially injurious,” as required, but rather normal business practice to
protect what it believed were legally protectible marks and copyrights.(How could it reasonably have believed
this?)Nola Spice’s summary judgment
motion was denied.

Obviously, Haydel’s trademark counterclaims were dead in the
water, but what about its copyright counterclaim? There too its overreach was fatal.Haydel claimed that any copying of a bead dog
would create an infringing derivative work (since its statues were public and
access could be presumed).Nola Spice
argued both that Haydel’s copyright was invalid because it wasn’t different
from the traditional bead dog design, and that even if it were valid, Nola
Spice didn’t infringe by making traditional bead dogs.

In correspondence between Haydel’s former attorney and the
Copyright Office, the Office noted that Haydel’s design appeared very similar
to traditional bead dogs, and uncopyrightable.The attorney offered several points of originality and dissimilarity,
and Haydel received its registration.The court agreed that Herbert Rosenthal Jewelry Corp. v. Kalpakian, 446
F.2d 738 (9th Cir. 1971), was apposite: just as there are only so many ways to
make a jeweled bee pin, there are only so many ways to make a bead dog.Nola Spice’s bead dogs weren’t exact copies
of Haydel’s bead dog, which was more of a caricature.Nola Spice’s jewelry didn’t always use
smaller beads for the nose and tail and didn’t have a necklace.Rather, Nola Spice’s dogs had wire or bead
tails and noses, and, on a few designs, a collar made of fabric or other
non-bead materials.

The court didn’t pass on the validity of the copyright,
because Nola Spice didn’t copy anything protectable.Though Duarte had access to the design, no
reasonable jury could find substantial similarity of expression.“There are only so many ways in which to
create a bead dog, and if the Court were to grant exclusive rights to Haydel,
its monopoly over a long-standing Mardi Gras tradition would be expansive,
which goes against the policy underlying copyright law.”Again, Haydel’s own words worked against it:
at his deposition, a member of the Haydel family stated that, in relation to
jewelry, clothing, and baked goods, he could not “envision anybody being able
to make a bead dog and sell it that doesn’t infringe on [Haydel’s] copyright.” But the court could!

Creative Commons/disclaimer

Text on this blog is licensed under a Creative Commons Attribution 2.5 License. Pictures and works quoted may be subject to other parties' copyrights.
I speak for myself. On this blog, I do not and cannot speak for Georgetown Law, the Organization for Transformative Works and/or AO3.